Making sense of Shariah finance terms

Access to Islamic Hedge Funds: November 2008


Murabaha is a Shariah-compliant sale where the seller expressly mentions the cost he has incurred on the commodities to be sold and sells it to another person by adding some profit or mark-up which is known to the buyer. For example, instead of a bank lending money to a customer who wants to buy a commodity, the bank buys the commodity and sells it to the customer for a declared marked-up sum. That way the bank makes money on the transaction without it being through interest.

Sukuk means a finan